Bitcoin continues to slip as China's Weibo suspends some cryptocurrency influencers' accounts

El Salvador's plans to the make Bitcoin legal tender in the Latin American country did not help the price of the world's biggest digital currency

MIAMI, FLORIDA - JUNE 04: Dave Pope (C), works in the Digifox booth setup at the Bitcoin 2021 Convention, a crypto-currency conference held at the Mana Convention Center in Wynwood on June 04, 2021 in Miami, Florida. The crypto conference is expected to draw 50,000 people and runs from Friday, June 4 through June 6th.   Joe Raedle/Getty Images/AFP

Bitcoin continued its decline on Saturday after potentially positive catalysts from El Salvador and Square were unable to assuage investor concerns over Chinese regulatory risks.

The world’s largest digital coin slipped to trade around $35,220 as of 6.31pm in New York, down 5.3 per cent in the past 24 hours. It was trading at 36,164 3.99, down 3.99 per cent on Sunday at 10.04am UAE time. The move extends its downtrend for a second day after a cryptic tweet from Elon Musk that hinted at a potential split with the cryptocurrency.

Weibo, a Chinese social-media service, appears to have blocked some crypto influencer accounts on Saturday, citing violation of unspecified laws and Weibo community rules. While Weibo has cracked down on various crytocurrency-related accounts in past years, the news came on top of recent harsh Chinese regulatory rhetoric that has already led to a plunge in prices for many digital coins.

Meanwhile, El Salvador president Nayib Bukele said he plans to submit legislation that will make Bitcoin legal tender in the country, world-first, according to a video message he gave to the Bitcoin 2021 conference in Miami.

Square said on Saturday it will invest $5 million to build a solar-powered Bitcoin mining facility at a Blockstream Mining site in the US through a partnership with the blockchain technology provider.

Weekends in recent months have been rocky for cryptocurrencies, which trade every day of the week. Before this weekend, Bitcoin’s average swing on Saturdays and Sundays this year comes in at 5.35 per cent.

“Weekends have not been kind to Bitcoin lately,” Nicholas Colas, co-founder of DataTrek Research said. “You don’t have institutional players involved as much, it’s not as liquid a market as it is during the week.”

Mr Musk has agitated Bitcoin and other digital coins with his social media posts. On Saturday, he tweeted that “Goods & Services are the real economy, any form of money is simply the accounting thereof.”

Bitcoin is struggling to break above its 20-day moving average – it failed to do so on Thursday and Friday – and is having a hard time advancing towards $40,000. If the coin were to breach that round-number level, it would probably test its 200-day moving average of around $41,500, something many analysts would consider a bullish catalyst.

However, as Bitcoin continues to fluctuate in a narrow range, a retest of the $30,000 level could also be in play until more positive catalysts emerge.

Still, many point out that the cryptocurrency space has always been volatile. Its price swings – up and down – are a characteristic of the market, they argue, and many of its long-term investors are undaunted by its fickle day-to-day swings.

“Our investor base has experienced market volatility many times and they know that this comes with the territory – the ability for there to be pretty pronounced movements in price are native to investing in crypto, particularly at this point in crypto’s life cycle,” Michael Sonnenshein, chief executive at Grayscale Investments said. “Investors don’t really get phased.”

“It’s very difficult to make a fundamental case sometimes for some of these, and so I think that’s your primary risk,” JJ Kinahan, chief market strategist at TD Ameritrade, said.